Double hammer blow of Argentina’s soy production

In Argentina, the excessive wetness could cut soy yields by 5 percent to 15 percent, on top of the huge losses caused by hot, dry conditions that started in November and lasted through March.

Soy harvesting machines are getting stuck in the mud as they try to move over water-logged fields in Argentina, threatening the country’s main cash crop as the government tries to stabilize its volatile peso currency and meet its new deficit target. The soy crop had already been hurt by a drought that ended last month, only to give way to near-constant rain storms that have turned once bone-dry fields into unharvestable mush. The excessive wetness could cut soy yields by 5 percent to 15 percent, on top of the huge losses caused by hot, dry conditions that started in November and lasted through March. In some areas, water-logged bean pods burst open or sprout before being harvested, hurting quality and lowering prices by up to 30 percent, according to the Rosario grains exchange.

The double hammer blow of drought followed by excessive rain comes as the government tries to calm its volatile financial markets in part by cutting its fiscal deficit target to 2.7 percent of gross domestic product. To hit that target it needs revenue from the 27.5 percent tax it imposes on soybean exports. A smaller crop means less tax revenue for a country’s whose economy is already in trouble. Argentina’s 2017/18 soy crop is projected at 40 million tonnes by the U.S. Department of Agriculture. That is down from the 57 million tons estimate the USDA gave before the start of a five-month drought in November. The USDA also chopped its 2017/18 Argentina corn harvest estimate to 33 million tons from 42 million in November.